WGU - D774 Pre-assessment 2 QUESTIONS WITH CORRECT ANSWERS | BRAND NEW!

Historical period of increased accounting importance

The Industrial Revolution

Effect of Sarbanes-Oxley Act of 2002

It increased corporate responsibility.

Using corporate credit card for personal expenses

Fraud

Purpose of financial accounting

Provides historical financial data in standardized reports for external stakeholders

Feature of managerial accounting reports

Tailored to meet internal decision-makers' needs

Statement describing managerial accounting reports

Prepared for internal decision-making needs of management

SEC role in accounting standards

Enforces financial reporting rules established by the FASB

Certification to offer auditing/tax services

CPA

Auditor buying stock in a company they audit

Violates independence and objectivity

Who oversees and maintains internal controls

Management

Manufacturing expense category on income statement

Cost of goods sold

Interpretation of net income

Revenues are greater than expenses

Limitation of accrual accounting

May not reflect actual cash flow

Effect of favorable volume variance

Increases revenue and cost of goods sold

Category for wages of store employees

Cost of goods sold

Which statement tracks actual cash movement

Statement of cash flows

How to report flea market finds on balance sheet

Assets

Trend shown by comparative income statements

Changes in profitability over time

Why is net income lower than revenue

Expenses reduce total amount earned

Why positive net income but low cash

Non-cash expenses & accrual accounting impact cash flow

Why $100k revenue but $85k receipts

Customers have not yet paid

Limitation of the balance sheet

Does not include future performance

Stock issuance increases which equity category

Paid-in capital

Why are raw materials assets

They have future economic value

Balance sheet limitation shown by missing legal obligations

May not account for contingent liabilities

Where record $350 owed to farmer

Short-term liability

Building purchased is what type of asset

Long-term tangible asset

Yellow Leaf Bookstore owners' equity balance

$36,000

Accrual basis — which sale recorded today

Recording a $500 sale today with cash collected in 30 days

Insurance policy purchase is in which cash flow section

Operating activities

Purchase of new plant building goes where

Investing activities

Sale of $35,000 of stock for cash goes where

Financing activities

Issuing bonds & paying dividends are what category

Financing activities

Cash received from selling $135 of products is what

Cash inflow under operating activities

Cash inflow from investing activities

Cash received from sale of long-term investment

Cash balance

Net income

Which balance needed from income statement for owners' equity?

Ending owners' equity balance

Which balance used from owners' equity for balance sheet?

Relationship between owners' equity & balance sheet

Ending owners' equity becomes equity section of balance sheet

Limitation of incremental budgeting

Overlooks inefficiencies

Budgeting limitation when expenses change unexpectedly

Lacks flexibility

Limitation of incremental budgeting on strategy

No alignment with changing organizational objectives

Effect of inflation on incremental budgets

Increases occur automatically without performance evaluation

What is carried over in incremental budgeting

Past year's actual performance

Bottom-up incremental budgeting

Budgeting that starts with plant managers?

Limitation of incremental vs zero-based budgeting

May carry over inefficiencies without review

Strategy for managing non-peak expenses in ZBB

Allocate extra money into a savings fund for irregular costs

First step in zero-based budgeting

Identifying and categorizing all expected expenses

Why ZBB may reduce spending on non-urgent programs

Hard-to-justify areas get cut short-term

Total revenue variance

$2,400 unfavorable due to unfavorable volume variance

Limitation of trend analysis

Assumes past trends will continue without disruption

Why trend analysis is important

Helps identify opportunities and anticipate threats

Why variance analysis is important

Identifies differences between actual and budgeted performance

Why analyze cost variances

Compare actual to budget amounts and find discrepancies

How expense variance analysis improves profitability

Identify areas where costs are higher than expected

Why analyze $500k budget vs $450k actual revenue

Determine reasons for lower-than-expected sales

Difference between investment center & profit center

Investment centers evaluated on capital use & net income

HR department safety training

Discretionary cost center

What does revenue center variance report show

Where division is performing relative to sales targets

Variable cost example for hotel

Cleaning linens and towels

Product cost for running shoe manufacturer

Assembly line worker's salary

Drawback of higher fixed costs

Increased financial risk

Costs included in work-in-process

Direct labor and indirect material

Cost that is both prime and conversion cost

Direct labor

System used to manufacture identical products

Process costing

Purpose of activity-based costing

Allocate overhead costs more accurately

Effect of decreasing variable selling costs

Decreases breakeven point in units

Which example is fixed cost

Plant manager salary

Contribution margin scenario result

Contribution margin ratio increases

Relevant range benefits management how

Indicates the production level at which fixed costs remain unchanged